The structure of the defense industry and the security needs of the country: a differentiated products model
AbstractThis paper models the interactions between the defense needs of the USA and Western Europe, which produce several heterogeneous defense goods, and the defense industry market structure. The results show that net defense costs of the USA and Europe are lower when the number of defense firms in each arms-producing country is small and when the world prices of the defense goods are high. The model predicts that the increase in world prices will crowd-out countries in the developing world from the market for modern weapon systems and may force them to develop and use 'cheap and dirty' weapon systems.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Defence and Peace Economics.
Volume (Year): 15 (2004)
Issue (Month): 5 ()
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Web page: http://www.tandfonline.com/GDPE20
Find related papers by JEL classification:
- JEL - Labor and Demographic Economics - - - - -
- cod - - - - - -
- H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
- H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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